The Peter Principle

February 3, 2009 Written by Frances Schagen

Most people start a business because they are good at what they do – bookkeeping, hairdressing, selling, fixing cars, cooking etc. They start off as self employed…(bookkeepers, hairdressers, mechanics ) and do fine. Over time they decide to grow their business. Soon they find they spend less time doing their business and they have to spend more time working on and growing their business.

That’s a whole new skill set and they find they get over their heads pretty quickly.

Here’s where the Peter Principle kicks in. It states: “In a Hierarchy Every Employee Tends to Rise to His Level of Incompetence.” The related and satirical Dilbert Principle created by cartoonist Scott Adams states that companies tend to promote their least competent employees to “remove morons from the productivity flow.”

Can the same be said for business owners?

Do we grow our companies just beyond the point of our ability to manage them? The businesses that make the transition are often the ones that hire professional management.

Or following the Dilbert Principle – do you know any people who started their businesses because they were not employable?

Sometimes people start a business because they figure they can run a business better than their boss can. Michael Gerber, in his E-Myth book, talks about how a person with a skill is hit by an entrepreneurial seizure and starts a business. This technician believes that because they know how to do the work of a business, they know how to run that business.

What do you think? Do the Peter Principle and the Dilbert Principle apply? Do you know of any examples? Do you see it in yourself?

Leave a comment and let me know what you think.

Know Where You Are Going, Your Effortless Business
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